The Stochastic Frontier Analysis On Managerial Incentives And Firm Efficiency

With the development of economy and opening-up, the enterprises in domestic market and international market will face to harder competition. Therefore, it is important that improving their production and operation efficiency to enforce competitiveness for the harder competition. Management as the company's operating and innovation leader, play the key role on the efficiency of production and operation from the internal institutional arrangements and decision-making, but with the separation of ownership and management of modern enterprise, business owners and management face the various "agency problem" . Therefore, establishing an incentive mechanism for enterprises of senior management has a major significance, such can fully mobilize the corporate management of the initiative to improve the efficiency of production and operation. In china, the current study focuses on aspects of internal motivation of the management incentive. Both in empirical research and theoretical analysis, management incentives or constraints outside the enterprise do not get enough attention; also evaluate the situation and operating results are generally based on the traditional evaluation of financial indicators of the management of listed companies. All of this caused by insufficient incentives or motivate executives improperly and the evaluation is not comprehensive, objective and fair to the management of listed companies in china.For the above, the authors set up a stochastic frontier model to make an empirical study on the nexus between managerial incentives and firm efficiency in Chinese between traditional industries and high-tech industries from 2005 to 2009. Based on theoretical analysis and combined with the current status of the incentive executives, selected internal and external incentives from the business operations aspects make a comprehensive study on the company of the efficiency of management incentive effects and select high-tech industry and traditional industry from the market structure make comparative analysis. The purpose is to determine management incentive effect on firm efficiency, and for different sectors to identify appropriate incentives to improve the management efficiency of enterprises. Empirical results show that: firstly, the properties of industry and the expectations of its future trend play an important role in nexus between internal incentives and firm efficiency. Different industries vary widely within the incentive effect, As expected growth of high-tech industries is relatively high, the managerial wage and managerial stockholding can play a very good incentive; On the contrary, due to expected growth of traditional industries is low, relative to the effects of managerial wage effect more pronounced that is "managerial stockholding fail" phenomenon, But the two industries were not an "internal control" phenomenon. Secondly control incentives within the enterprise consistent with the conclusions of the two industries, Chairman and general manager of one of two company can not play a better incentives, and chairman of the replacement can get a better incentive effect. Thirdly, external capital market and product market incentives (or pressure) on the company's management incentive has a positive significant effect, but the capital market pressure on the high-tech industry more binding, and product market pressures on traditional industries more binding.Therefore, in order to improve firm efficiency from the perspective of management incentive. Firstly it is necessary to put forward incentives according to industry characteristics for the management of the industry; secondly, it is important to establish market-oriented personnel selection, appointment and promotion mechanisms; thirdly, it is necessary to foster effective stable capital market, capital market supervision from the outside and really play the role of market constraints.